(The following post is contributed by Soma Bagaria, who is a Legal Advisor at Vinod Kothari & Company in Kolkata. She can be reached at [email protected]) In every assignment transaction, there has been a constant conflict of whether the substance or form shall dominate while determining the nature of a transaction. There are two schools of thought on this: one which gives dominance to...
Securities Regulation Redux
Over the last decade, there has been a continuous tightening of securities regulation and corporate governance norms in the US following the various corporate governance scandals (Enron, WorldCom, etc.) and the global financial crisis. This has appeared in the form of legislation such as the Sarbanes-Oxley Act and the Dodd-Frank Act. More recently, however, there has been a relaxation on some...
Women on Boards Survey
The issue of diversity on corporate boards (particularly gender diversity) has garnered much importance lately, including in academic studies. The Harvard Corporate Governance Blog cites to a GMI Ratings’ survey that measures board representation by women in 45 countries across the globe. The survey reports heterogeneity in trends both among developed markets and emerging markets as distinct...
The Debate over Staggered Boards
Staggered boards are found to be a form of anti-takeover defence. This concept, which is prevalent in several U.S. companies, ensures that only a third of the board can change each year. Hence, it would not be possible for shareholders to replace the board, except through a gradual process of changing a third of the board each year. There is an interesting battle brewing in the U.S...
Facebook’s Capital Structure and Governance
In the wake of Facebook’s mega-IPO, the Deal Professor examines the capital structure of the company, whereby it has decided to follow suit from the earlier high-profile Internet IPO of Google and go with a dual-class share structure. He notes: … an investment in Facebook is really an investment in Mr. Zuckerberg: Facebook’s offering documents show he will retain control over Facebook even when...
Crowd-Funding and Its Regulation
The concept of crowd-funding seems to have caught on. In one form, it involves small and medium-sized companies raising funding from investors using the Internet (usually social networking sites or specialist crowd-funding websites). While the concept itself is quite wide and allows for fund raising in many different contexts, it is particularly useful for small entrepreneurs and start-ups. But...
Insider Trading Laws in the U.S.: The Case Against Rajat Gupta
(The following post has been contributed by Karan Tyagi, who is an associate with Gide Loyrette Nouel in Paris. After obtaining his law degree from GLC (Mumbai), Karan went on to do his LL.M. from Harvard Law School last year. He can be contacted at [email protected]) Yesterday’s Financial Express has a piece authored by me on Rajat Gupta’s insider trading trial in the...
Corporate Governance: Transactions with Controlling Shareholders
Two recent events around the world bear eerie resemblances with India’s own corporate governance scandal that came to light in Satyam Computers nearly three years ago. Readers may recall that the Satyam episode was triggered by the company’s proposed acquisition of two related entities, Maytas Properties and Maytas Infra, which was approved by the board of Satyam, but vehemently rejected by its...
Court of Appeal: Clarification of ‘Meridian’ attribution
The theory of attribution in common law turns significantly on the application of the two main cases: Tesco Supermarkets v. Nattrass [1972] AC 153 (which provides for a strict reading of who the ‘directing mind and will’ of a company is), and Meridian Global Funds v. Securities Commission [1995] 2 AC 500 (which, in certain instances, allows for a more flexible understanding). In the...
Lifting the Veil: Is ‘Fraud’ Necessary?
The sanctity of the corporate veil is among the most important pillars of certainty in commercial law today. English Courts, we have seen earlier, have given great respect to independent personality, refusing to lift the veil on grounds of economic ‘reality’ such as “single economic entity”, or subjective notions such as “public interest”. This tendency has been in existence since Adams v. Cape;...
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